Companies are continuing to increase investment in search marketing while also increasing efforts to improve website performance, according to research published today.

The eighth annual UK Search Engine Marketing Benchmark Report 2014, published by Econsultancy in association with digital marketing agency Latitude, found that 58% of companies are increasing their paid search budgets this year, up from 55% in 2013.

Similarly, more than half (55%) of companies said they are increasing their budgets for search engine optimisation (SEO) over the next year, up from 51% a year ago.

Meanwhile, the research also found that 60% of companies are increasing their budgets for conversion rate optimisation, reflecting a desire to ensure that budget spent on acquiring traffic is not wasted by poorly converting websites.

Econsultancy Research Director Linus Gregoriadis said: “Companies are becoming increasingly savvy about the folly of spending more on search marketing without simultaneously investing in conversion rate optimisation. Mobile optimisation is a particular area of focus with many companies eager to make the most of increased traffic coming via smartphones and tablets.”

“No prizes for guessing that companies continue to see the value in search engine marketing in 2014” commented Latitude’s Managing Director, Richard Gregory.

“What is different this year however is the encouraging number of companies realising the value of Conversion Rate Optimisation, which speaks volumes in regards to companies aiming to ensure that most is being made out of traffic driven to their websites. That said, it’s surprising to see the investment in analytics is falling behind spend on other marketing channels such as search and display. This could, at least in part, explain why companies struggle to measure impact on their marketing investment.”

The benchmark report is focused on SEO and paid search marketing, but also incorporates questions about social marketing, display, analytics and conversion rate optimisation because of the increasing overlap between search and these disciplines.

Companies are spending more on search marketing even though it is becoming increasingly challenging to measure the returns, partly due to Google’s withholding of valuable keyword data. Only 36% of companies stated that they have ‘a definite tracking solution to measure consistently across different digital channels’.

The study also found that companies are increasingly struggling to track the return on investment from paid search and SEO effectively. Only 44% of companies say they can measure paid search ROI effectively, down from 53% in 2013.

This trend is even more evident for SEO, with only 31% of companies saying they can measure organic search ROI effectively, down from 45% a year ago. ‘Keyword data not provided’ is the second greatest obstacle to SEO success, after lack of internal resource.

While some organisations are dedicating more resources towards improving their analytics capabilities, only 39% of companies are planning on investing in analytics which suggests that spending on analytics is failing to keep pace with investment in marketing channels such as search, social and display.

The research, which was carried out in the spring of 2014, is based on a survey of more than 700 companies and agencies, making this the most authoritative report on the UK search engine marketplace.

Other key findings

-) More than 55% of companies surveyed for the report are spending at least £50,000 a year on paid search, up from 51% last year. The proportion of companies spending less than £25,000 has dropped 6% from last year, from 40% to 36%.

-) Paid search now constitutes 26% of total marketing budget, compared to 24% in 2013. SEO has dropped from 18% to 14%. Meanwhile, social accounts for 9% of budget while display accounts for 10%.

-) More than half (54%) of organisations say that there is flexibility to shift budgets between channels based on ROI, though a fifth (20%) say that budgets are rigidly split by channel. Around a quarter (26%) say their digital marketing budget is not split out by channels.

-) A quarter of companies (26%) say that digital marketing budget is bolted on their above-the-line media spend as fixed budget. Just under a third (31%) say that their digital budget is bolted on as flexible budget, while 43% say that above-the-line and digital marketing budgets are separate.

-) 67% of client-side respondents are spending over £10,000 in display advertising and 9% are spending £1m plus.

-) 60% of the agencies surveyed in the report say that SEO client contracts are at least one year in length. This decreases to 52% for paid search, 49% for display advertising and 47% for social media marketing.

-) Nearly two thirds of companies (64%) are being hampered in their efforts to measure return on investment by not having a definitive tracking solution.

-) Mobile search now accounts for 9% of paid search budget, according to client-side respondents. But according to agency respondents, the average figure for their clients is 15%.

-) Survey respondents are more likely to be positive rather than negative about the impact of Google’s Enhanced Campaigns, although many are unhappy that there is now forced inclusion of mobile campaigns which has decreased effectiveness. Agency respondents are most positive about Enhanced Campaigns, with 23% of supply-side respondents saying the impact has been positive compared to 9% who say it has been negative.

-) 74% of companies are paying to advertise on Facebook as part of their marketing activity. Just over a third are paying to advertise on Twitter (37%) and LinkedIn (also 37%).

-) 60% of companies say their SEO activities and content strategy are integrated.

Econsultancy’s mission is to help its customers achieve excellence in digital business, marketing and ecommerce through research, training and events.

Founded in 1999, Econsultancy has over 250,000 subscribers, is used by more than 500,000 professionals every month, and has offices in New York, London and Singapore.

Econsultancy subscribers get access to research, market data, best practice guides, case studies and elearning – all focused on helping individuals and enterprises get better at digital.

The subscription is supported by digital transformation services including digital capability programs, training courses, skills assessments and audits. We train and develop thousands of professionals each year as well as running events and networking that bring the
Econsultancy community together around the world.

Latitude Digital Marketing has pioneered the use of digital channels in the UK and internationally for 13 years. Areas of expertise include search engine optimisation (SEO), pay- per-click (PPC), social media marketing, online display advertising, affiliate marketing and conversion analytics. The business works across a range of sectors including retail, gaming, leisure and travel with clients such as Fitness First, Haven Holidays and Snow+Rock.